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Uber's stock fell 7.6 percent on Friday, its first day as a publicly traded firm. The bloodbath continued on Monday, with Uber's stock price falling by an additional 10.7 percent.

It's a sobering moment for the ride-hailing company. As recently as last October, some Wall Street banks were estimating that the company could be valued as high as $120 billion. At Monday's closing price of $37.10, Uber is worth barely half that, at $62 billion. (The company is worth around $68 billion on a "fully diluted" basis, which counts stock options and other assets that could eventually be converted into shares.)

Monday wasn't a good day for the broader stock market either, but the Standard & Poor's 500 fell a comparatively modest 2.4 percent.

Uber's top American competitor, Lyft, fell 5.7 percent, valuing the company as a whole at $13.8 billion. The company's stock has lost a third of its value since its March IPO.

Uber has never made an annual profit, and in recent quarters, the company has been losing more than $1 billion per quarter. The company has justified those losses by pointing to its rapid growth. Some of those losses have reflected efforts to expand into new markets as well as aggressive research and development spending.

Until recently, investors seemed to be happy to continue covering Uber's losses in hopes of owning what they hoped would be a hugely profitable technology company. Indeed, Uber raised $8.1 billion in extra cash in its initial public offering—a sum that will last the company about two years at its current burn rate. But Wall Street's patience won't last forever. Uber CEO Dara Khosrowshahi is going to face growing pressure to make good on Uber's long-promised path to profitability.

Lyft is in a similar predicament. It's a significantly smaller company, so its market capitalization, losses, and cash cushion are all proportionately smaller. But like Uber, Lyft has seen mounting losses along with rapidly expanding revenue. And before too long, the company needs to demonstrate that it can turn a profit.

217 Reader Comments

What assets does uber have other than brand recognition that makes it worth even $68B ??

Its revenues were 3 billion last quarter. It spent 4 billion, so it lost a billion. So it needs to adjust spending by 25% or revenues by 33% to break even.

But it's currently subsidizing rides to push out competition, so if they win some big metro areas where competitors just give up or go out of business, they can raise prices and make more money. A big chunk of their expenses are dedicated to expansion, so eventually they can slow down spending there. Another big expense is their self-driving cars. They're rushing to be one of the first to market, which could give them a big advantage in patents and mindshare. So that expense won't be so high forever. (I don't think they will make it, but you multiply the chance of it happening by the size of the payoff to get the "expected value".) Finally, even if they aren't first, they might be able to stop paying a bunch of their drivers if they ever make or buy a self-driving car system, which could save them tons of money.

I don't see owning and maintaining a fleet of cars being much cheaper than paying drivers. Services like Car2Go already offer cars without drivers and they're not vastly cheaper than Uber. Moreover, Car2Go offers Smart cars instead of expensive autonomous cars, and it's owned by an auto manufacturer so it gets the advantage of lowest-possible car price.

Pivoting from a low-capital digital marketplace that keeps 30%+ of each transaction to a capital-intensive owner and maintainer of giant vehicle fleets makes no sense at all. It's complete lunacy.

What, waiting for Uber to achieve market dominance so they can adjust their price upward and be profitable? That's done already, it's called the Taxi industry. Can't wait for the days when the entire fleet of Uber self-driving cars smells like urine, just like the subways they've replaced but you get to pay 5 times the fare. But unfortunately, even that grimy future will not arrive I'm afraid.

The ride-share industry will never make money as it "intended" to. Uber knows it, all the VC knows it, even Wall Street knows it but they all keeps on selling the unicorn that's the only way "they" can get their money back. Uber burned a billion dollar in the 1st quarter of 2019, and this IPO netted them 8billion last week but by now it's down to 6 maybe? And self-driving car technology and public policy to allow them roaming our streets are still nowhere to be seen. Even by the most optimistic estimation, it's 5 years away, 5yrs x 4quarters (1billion per quarter) = 20 billion.

China is one of the fastest growing markets and even there, DidiChuxing the one that kicked Uber's behind and kicked them out of China is selling insurance on their app to "diversify" their business model. And still, not profiting. Why? Because people buy cars, not abandoning car ownership as Uber wants us to believe. https://www.scmp.com/tech/start-ups/art ... l-services

Think about this. When thousands of self-driving cars are roaming our streets that would mean pretty much every car is self-driving. Do we still need Uber then? My very own car can drop me off at the office then go back home pick up my kids and send them to school before stopping by the Whole Food to pick up my groceries. Better yet, my own self-drive car will also be roaming the streets to pick up fares and I do'nt have to share that profit with Uber.

On the other hand, why own a car and all the expenses that go with that if an Uber self-driving car is ready at short notice?

I'm not defending Uber specifically, but that's the future I see with self-driving car in a lot of urban areas.

Come back in 50 years after potentially 30 years of mature self-driving tech and let's talk...

Hell, come back in 100 years after self-driving vehicles are as old and common as conventional automobiles were in the 1970s...

Sure, we will all be traveling in flying cars.

Don't need to wait 50 years for that. Uber Elevate is already working on that and hopes to start service in LA (and Houston?) in the next couple of years with their flying taxi service. They've partnered with Embraer to develop electric tilting prop VTOL (like a mini version of the Osprey) aircraft specifically for this purpose. I'm surprised this wasn't mentioned anywhere in the article. This is a new service that none of Uber's competitors are even thinking of getting into. They've sunk a fair amount of money into it already.

Totally unsurprising. It's a currently unprofitable company depending on self driving cars, an unproven and potentially very expensive tech, to save them from the obligation of their current costs. This whole IPO looked like investors cashing out from the start.

Worse, if car makers can use someone else's self driving tech then what do they need Uber for? Running over pedestrians?

What, waiting for Uber to achieve market dominance so they can adjust their price upward and be profitable? That's done already, it's called the Taxi industry. Can't wait for the days when the entire fleet of Uber self-driving cars smells like urine, just like the subways they've replaced but you get to pay 5 times the fare. But unfortunately, even that grimy future will not arrive I'm afraid.

The ride-share industry will never make money as it "intended" to. Uber knows it, all the VC knows it, even Wall Street knows it but they all keeps on selling the unicorn that's the only way "they" can get their money back. Uber burned a billion dollar in the 1st quarter of 2019, and this IPO netted them 8billion last week but by now it's down to 6 maybe? And self-driving car technology and public policy to allow them roaming our streets are still nowhere to be seen. Even by the most optimistic estimation, it's 5 years away, 5yrs x 4quarters (1billion per quarter) = 20 billion.

China is one of the fastest growing markets and even there, DidiChuxing the one that kicked Uber's behind and kicked them out of China is selling insurance on their app to "diversify" their business model. And still, not profiting. Why? Because people buy cars, not abandoning car ownership as Uber wants us to believe. https://www.scmp.com/tech/start-ups/art ... l-services

Think about this. When thousands of self-driving cars are roaming our streets that would mean pretty much every car is self-driving. Do we still need Uber then? My very own car can drop me off at the office then go back home pick up my kids and send them to school before stopping by the Whole Food to pick up my groceries. Better yet, my own self-drive car will also be roaming the streets to pick up fares and I do'nt have to share that profit with Uber.

On the other hand, why own a car and all the expenses that go with that if an Uber self-driving car is ready at short notice?

I'm not defending Uber specifically, but that's the future I see with self-driving car in a lot of urban areas.

Come back in 50 years after potentially 30 years of mature self-driving tech and let's talk...

Hell, come back in 100 years after self-driving vehicles are as old and common as conventional automobiles were in the 1970s...

Sure, we will all be traveling in flying cars.

Don't need to wait 50 years for that. Uber Elevate is already working on that and hopes to start service in LA (and Houston?) in the next couple of years with their flying taxi service. They've partnered with Embraer to develop electric tilting prop VTOL (like a mini version of the Osprey) aircraft specifically for this purpose. I'm surprised this wasn't mentioned anywhere in the article. This is a new service that none of Uber's competitors are even thinking of getting into. They've sunk a fair amount of money into it already.

Uber isn't the first to think of this. There's been many others ever since drones became popular and demonstrated how easy it is to have electric, autonomous aircraft. But the Achilles' heal of these flying cars is noise pollution.

What assets does uber have other than brand recognition that makes it worth even $68B ??

Mostly the promise that they're worth that much.

To add to that, a recent episode of the Trashfuture podcast was talking about this, there's this trend in tech IPOs(Uber, WeWork) where the valuation isn't based on what it's really worth, but on the idea that it will become a monopoly. Capital needs to expand, so these companies are essentially betting on their own future success, since basically the only way to continue to expand as the rate of profit falls at that point is through monopoly rent.A quote from the host Riley sums it up:

Quote:

What you're trying to do is make a bet on owning everything, so Facebook is the social network, it's basically the only one because it owns WhatsApp and Instagram etc. and so everyone who invested in them early on congratulations you now own a monopoly, if you invested in Bebo or Friendster sorry better luck next time."

Monopoly busting needs to happen again, really.

Hell, Google's already prepared for it by dividing all of their divisions into separate companies under Alphabet, Inc.

Every time I see a blog post about stock prices I can only hope that the blogger doesn't invest their own money in individual stocks. I'm not defending Uber as a stock or as a company, but watching the daily fluctuations of your market positions will make you a very unhappy person.

Uber isn't the first to think of this. There's been many others ever since drones became popular and demonstrated how easy it is to have electric, autonomous aircraft. But the Achilles' heal of these flying cars is noise pollution.

I never said they were the first to think of it. I said none of their competitors are thinking of getting into this business. I'd be happy to be proven wrong, but I don't think the Yellow Cab company has been investigating building a flying Studebaker, but I think it would certainly be neat to see if they did! Neither has Lyft been looking at this as far as I'm aware.

Just found an article from late last year that stated, worldwide there are around 19 companies looking at flying cars and related services, some of the automated. Several of these are well known aircraft manufacturers themselves. Most of them are new start-ups no one has ever heard of. Presently, none of them are competitors to Uber. They may be competitors one day if they can deliver a working product/service, but it's far from clear that any of them will or which ones would operate here in the US, Uber's home market.

Every time I see a blog post about stock prices I can only hope that the blogger doesn't invest their own money in individual stocks. I'm not defending Uber as a stock or as a company, but watching the daily fluctuations of your market positions will make you a very unhappy person.

Don't worry, the people making the big money aren't really contributing either, they're using automated trading algorithms running on nanosecond fractions of a cent transactions to extract billions from the economy without contributing to it in any way.

Did you bother reading the article? Or just looking up the numbers yourself?

S&P 500 - down 2.4% on the day.

Uber - down 10.7% on the day.

One of these things is not like the other.

Exactly. One of these things is indeed not like the other. UBER has only traded for two days, has little by way of assets, isn't profitable, etc. Naturally it will be much more volatile than the S&P and will move three to five points for each of the S&P's. For sure, they had a bad day, but Friday's -7.6% IPO should concern investors far more than today's -10.7%. Other volatile issues that didn't have a great day:

What assets does uber have other than brand recognition that makes it worth even $68B ??

it has an app. Those are worth at least a dozen dollars.

It's funny how Uber's "contractors" are essentially leasing their time on the Uber app. But Uber's own app is tied to 2 ecosystems which they have to be careful with. I'm reminded of an article awhile back about Kalenick worrying about being tossed off the Apple store because they were doing some stuff that was not kosher with Apple's term of service. Essentially, Uber is a house of cards built on top of shifting sands.

What assets does uber have other than brand recognition that makes it worth even $68B ??

it's not about assets (which I think would be book value and is only one part of evaluating share price), it's about net present value of discounted future revenues (because shares are a promise to pay out dividends or somehow else return value to investors... they are literally treated as a liability in a company's accounting)

it's the whole reason why their stock price has been tumbling and is alluded in the article: investors are increasingly skeptical (buyer's remorse?) about uber's ability to return money back to the investors (or even turn a profit), so they're selling shares and hammering hte share price.

Quote:

Hesster56 wrote:Well, yes. But chances are, so did everyone else.

Quote:Monday wasn't a good day for the broader stock market either, but the Standard & Poor's 500 fell a comparatively modest 2.4 percent.

It's worth pointing out that the volatility felt by the escalating trade war is not going to be felt equally by companies. I imagine speculative bets will suffer more than "safer" bets, so the fact that the rest of the market is going down is still relevant, even if uber outpaced the overall declines.

What, waiting for Uber to achieve market dominance so they can adjust their price upward and be profitable? That's done already, it's called the Taxi industry. Can't wait for the days when the entire fleet of Uber self-driving cars smells like urine, just like the subways they've replaced but you get to pay 5 times the fare. But unfortunately, even that grimy future will not arrive I'm afraid.

The ride-share industry will never make money as it "intended" to. Uber knows it, all the VC knows it, even Wall Street knows it but they all keeps on selling the unicorn that's the only way "they" can get their money back. Uber burned a billion dollar in the 1st quarter of 2019, and this IPO netted them 8billion last week but by now it's down to 6 maybe? And self-driving car technology and public policy to allow them roaming our streets are still nowhere to be seen. Even by the most optimistic estimation, it's 5 years away, 5yrs x 4quarters (1billion per quarter) = 20 billion.

China is one of the fastest growing markets and even there, DidiChuxing the one that kicked Uber's behind and kicked them out of China is selling insurance on their app to "diversify" their business model. And still, not profiting. Why? Because people buy cars, not abandoning car ownership as Uber wants us to believe. https://www.scmp.com/tech/start-ups/art ... l-services

Think about this. When thousands of self-driving cars are roaming our streets that would mean pretty much every car is self-driving. Do we still need Uber then? My very own car can drop me off at the office then go back home pick up my kids and send them to school before stopping by the Whole Food to pick up my groceries. Better yet, my own self-drive car will also be roaming the streets to pick up fares and I do'nt have to share that profit with Uber.

Really ignorant stuff here for sure. I'll just say that 10s of millions of Americans don't own cars. Are you even aware of that? Not to mention, for many people, if you can simply hail a self driving car any time, why would you ever own one. Oh, and the fact that in the future car ownership is likely to be significantly more expensive than it is today as governments continue to dissuade people from owning them with ever higher fees and taxes on them. Shall I go on?

What does that revenue growth look like within the context of operating losses? Uber’s losses have increased steadily from Q1 2018 to Q4 2018, with the company posting losses of $478 million, $739 million, $763 million and $1.1 billion, respectively.

In the absence of revenue, how can Uber keep losing money and still have investors? The reason is that there is no design for Uber to be profitable without autonomous vehicles. The only way they are profitable (as a ride share company) is if they can reach autonomous service because at current, they are spending billions on "driver incentives".

You have to ask: how did Uber crush traditional taxis? Part of it is the app -- it's simply more convenient. But if you are at an airport and you have a choice of a line of taxis, ready to go, why would you wait and pick Uber or Lyft over the taxi? Because it's cheaper.

Uber and Lyft are cheaper because they are backed by a massive amount of capital investments. If they had to operate at break-even or at a profit like a taxi or any other car service, their prices would be significantly higher since they are taking a financial loss on every ride, every quarter.

However, as soon as they have the ability to operate a fully autonomous service, they can operate a fleet of vehicles 24x7x365 without the human labor costs which get rolled into every ride. The whole point of the capital investments in Uber and Lyft are to get them to autonomy either through their own R&D or through partnerships. At that point, they have a built in brand, application infrastructure, and operational infrastructure to dominate; traditional taxi service will basically be dead at this point because they will neither be able to compete based on convenience nor on price.

You invest in Uber and Lyft if you believe they can reach that point before going bankrupt because if they can reach that point, they will be extremely profitable.

I am personally on the fence; I could see a future where a Hulu-like model arises from a consortia of manufacturers to take on Uber and Lyft much as Hulu was created in the wake of other streaming services. On the other hand, it could be the manufacturers strike partnerships with Uber and Lyft as individual car sales dwindle in the next decade and our whole model of transportation changes.

You lost me when you said that price is the only difference between an Uber ride and a traditional cab ride.

Things I have never experienced in an Uber or Lyft ride, and things I have experienced with almost every cab ride I have taken.

1) Poorly maintained cars2) Drivers that speak zero English 3) The long way4) Getting fucked every step of the ride, from #3, to slowing at intersections so they can catch the light, driving slow as fuck to increase the time charge, etc.

What assets does uber have other than brand recognition that makes it worth even $68B ??

Nothing that cannot be replicated by someone else. Plus taxi companies are generally well entrenched in most areas.

As someone who is trying to build a local ridehailing alternative to Uber and Lyft in VA based upon giving drivers the ability to pick and choose their trips, I can tell you that replicating app functionality is relatively trivial. Getting thousands of drivers to sign up to a new service with no brand recognition is not.

Ew.

We already have a problem with this behavior in Las Vegas. Cab drivers don't want to do residential trips, they just want hotel rides (because there can be kickbacks, like strip club rides) or airport rides (because longhauling tourists can be a thing).

It got to the point where the city put in some sort of mandates that require the cab companies to allocate some subset/percentage of their drivers (per shift) to more residential areas.

tl;dr - I have a problem with what you're making. You may want to consider the Law of Unintended Consequences.

EDIT: it would help contextually to let everyone know that I've been driving a taxi for the past 5 years, I make more money doing that than teaching high school math and science. But, that's another story.

There's a solution to that, and not one that would be palatable to anyone: make taxi drivers employees and pay them a living wage.

Now, why wouldn't anyone be happy with that? There's a reason why I never work our local airport, I make more money taking people TO the airport in the same amount of time. As an independent contractor driver, essentially a small business owner, my goal is to maximize revenues and profitability. If I'm lucky and catch a fare like I did recently from Woodland Park to Denver International, a distance of 105 miles, I grossed $298, including tip and toll fee, and my net was $264 after paying the toll and gas for the trip. Trip time was about 2 hours. If I were an employee with an hourly wage, of say, $15 an hour, my net would be $-5. That sucks for the driver.

On the other hand, we hate those $5 Walmart and liquor store runs as well. They are money losers currently, as you can realistically make 2 of those runs in an hour. If I were to make that $15 hourly wage, I would make money, but the company would lose money. So, drivers avoid those calls as much as possible. They are not profitable.

My bottom line is that I have to generate a minimum of $25 in revenue per hour in a 10 hour shift to make at least $10 per hour for myself. My overhead in gas and daily fees is about 50%.

As Independent contractors, we pick and choose which jobs offered we want to accept or reject in order to be able to eat each day. Now, there are some cities where residents know if they pay their drivers at least $10 per ride for short hops, they get better service, as they understand the economics of driving a taxi.

Luckily for me, 75% of my revenue comes from repeat customers, those that have my number and call me directly, as they value a reliable, honest cab driver with a clean and nice smelling cab.

As for Uber/Lyft drivers, their solution isn't to be employees with a guaranteed wage, their solution is for the rate per hour to increase to cover the actual cost of doing business. They are not exploited the most by the company, they're exploited the most by their passengers that know they are screwing over their driver.

What does that revenue growth look like within the context of operating losses? Uber’s losses have increased steadily from Q1 2018 to Q4 2018, with the company posting losses of $478 million, $739 million, $763 million and $1.1 billion, respectively.

In the absence of revenue, how can Uber keep losing money and still have investors? The reason is that there is no design for Uber to be profitable without autonomous vehicles. The only way they are profitable (as a ride share company) is if they can reach autonomous service because at current, they are spending billions on "driver incentives".

You have to ask: how did Uber crush traditional taxis? Part of it is the app -- it's simply more convenient. But if you are at an airport and you have a choice of a line of taxis, ready to go, why would you wait and pick Uber or Lyft over the taxi? Because it's cheaper.

Uber and Lyft are cheaper because they are backed by a massive amount of capital investments. If they had to operate at break-even or at a profit like a taxi or any other car service, their prices would be significantly higher since they are taking a financial loss on every ride, every quarter.

However, as soon as they have the ability to operate a fully autonomous service, they can operate a fleet of vehicles 24x7x365 without the human labor costs which get rolled into every ride. The whole point of the capital investments in Uber and Lyft are to get them to autonomy either through their own R&D or through partnerships. At that point, they have a built in brand, application infrastructure, and operational infrastructure to dominate; traditional taxi service will basically be dead at this point because they will neither be able to compete based on convenience nor on price.

You invest in Uber and Lyft if you believe they can reach that point before going bankrupt because if they can reach that point, they will be extremely profitable.

I am personally on the fence; I could see a future where a Hulu-like model arises from a consortia of manufacturers to take on Uber and Lyft much as Hulu was created in the wake of other streaming services. On the other hand, it could be the manufacturers strike partnerships with Uber and Lyft as individual car sales dwindle in the next decade and our whole model of transportation changes.

You lost me when you said that price is the only difference between an Uber ride and a traditional cab ride.

Things I have never experienced in an Uber or Lyft ride, and things I have experienced with almost every cab ride I have taken.

1) Poorly maintained cars2) Drivers that speak zero English 3) The long way4) Getting fucked every step of the ride, from #3, to slowing at intersections so they can catch the light, driving slow as fuck to increase the time charge, etc.

I speak perfect English, my cab is subjected to mandated weekly safety, mechanical and cleanliness inspections, is clean and smells like Febreze, and I know full well that time is money, so I take the most efficient route to maximize my fares per hour. Don't generalize.

What does that revenue growth look like within the context of operating losses? Uber’s losses have increased steadily from Q1 2018 to Q4 2018, with the company posting losses of $478 million, $739 million, $763 million and $1.1 billion, respectively.

In the absence of revenue, how can Uber keep losing money and still have investors? The reason is that there is no design for Uber to be profitable without autonomous vehicles. The only way they are profitable (as a ride share company) is if they can reach autonomous service because at current, they are spending billions on "driver incentives".

You have to ask: how did Uber crush traditional taxis? Part of it is the app -- it's simply more convenient. But if you are at an airport and you have a choice of a line of taxis, ready to go, why would you wait and pick Uber or Lyft over the taxi? Because it's cheaper.

Uber and Lyft are cheaper because they are backed by a massive amount of capital investments. If they had to operate at break-even or at a profit like a taxi or any other car service, their prices would be significantly higher since they are taking a financial loss on every ride, every quarter.

However, as soon as they have the ability to operate a fully autonomous service, they can operate a fleet of vehicles 24x7x365 without the human labor costs which get rolled into every ride. The whole point of the capital investments in Uber and Lyft are to get them to autonomy either through their own R&D or through partnerships. At that point, they have a built in brand, application infrastructure, and operational infrastructure to dominate; traditional taxi service will basically be dead at this point because they will neither be able to compete based on convenience nor on price.

You invest in Uber and Lyft if you believe they can reach that point before going bankrupt because if they can reach that point, they will be extremely profitable.

I am personally on the fence; I could see a future where a Hulu-like model arises from a consortia of manufacturers to take on Uber and Lyft much as Hulu was created in the wake of other streaming services. On the other hand, it could be the manufacturers strike partnerships with Uber and Lyft as individual car sales dwindle in the next decade and our whole model of transportation changes.

You lost me when you said that price is the only difference between an Uber ride and a traditional cab ride.

Things I have never experienced in an Uber or Lyft ride, and things I have experienced with almost every cab ride I have taken.

1) Poorly maintained cars2) Drivers that speak zero English 3) The long way4) Getting fucked every step of the ride, from #3, to slowing at intersections so they can catch the light, driving slow as fuck to increase the time charge, etc.

I speak perfect English, my cab is subjected to mandated weekly safety, mechanical and cleanliness inspections, is clean and smells like Febreze, and I know full well that time is money, so I take the most efficient route to maximize my fares per hour. Don't generalize.

Don't generalize? Simply speaking from personal experience over 20+ years of being assraped by cabis.

Congrats, you're the 0.01% of cab drivers that don't suck. What city are you in?

Every time I see a blog post about stock prices I can only hope that the blogger doesn't invest their own money in individual stocks. I'm not defending Uber as a stock or as a company, but watching the daily fluctuations of your market positions will make you a very unhappy person.

Don't worry, the people making the big money aren't really contributing either, they're using automated trading algorithms running on nanosecond fractions of a cent transactions to extract billions from the economy without contributing to it in any way.

Well, sure. And if you were doing that you wouldn't be blogging. Or working.

It is far cheaper to pay drivers than own the vehicle, maintain the vehicle, gas up the vehicle, pay for insurance on the vehicle, etc etc. Being autonomous does absolutely nothing to alleviate any of the aforementioned costs.

There is no way this is true because if drivers weren't being paid enough to own, maintain, and fuel their vehicles, no one would drive for Uber or Lyft. This is simple math. The cost for the ride must cover the cost of the vehicle, the driver's time, the cost of fuel, the cost of maintenance, and still net the driver a small profit or else no one would drive since they would be in debt from maintenance and fuel alone.

So what's the alternative? Several million people buy their own autonomous vehicle to rent out to uber? You are right back to square one of paying someone (now indirectly) to drive people around.

People won't buy autonomous vehicles, Uber and Lyft will buy them directly from manufacturers.

Even if each autonomous vehicle cost an extra $20,000, that is cheaper than the profit that would otherwise go to a driver.

The problem is that uber needs to own and operate that fleet, taking on the capex and opex of doing that. Currently, they've managed to put all that capex and opex onto their drivers, de-risking themselves as a result. Someone like Tesla or Ford or Whoever is better positioned to own/operate an SDC fleet as they can completely vertically integrate the business and operate it cheaper than Uber could.

You kind of bring up the exact reason they need to get out of the driver business and into the fleet business. CapEx ca OpEx. Part of Uber’s problem is that right now they are a completely OpEx company which is not good. They have limited assets to use as leverage for funds in the form of collateral and to use to increase their value. Working as an engineer for a financial institution whose executives hear all about the ‘cloud’ and want to jump right into it I am seeing first hand the huge negatives in moving your expenses from capital to operations, and it isn’t good.

It dramatically impacts your ability to raise money, reduces your company value on the books and all kinds of other negatives from a tax standpoint as you can depreciate capital but not operations; as well as, you multiple other write downs from it. Being purely an operations company as they presently are is one of the many large problems they have. Other operations companies like YouTube, for example, were smart about how they did it. They kept the money flowing long enough for a more heavily capital company to buy them out for a princely sum and sold. That ship has sailed for Uber and Lyft however.

You invest in Uber and Lyft if you believe they can reach that point before going bankrupt because if they can reach that point, they will be extremely profitable.

The problem is that full self-driving autonomy is at least 3-5 years away. And the really bad news is that 5 years ago, it was 18 months away.

I think that is the biggest issue for investors: Self-driving autonomy isn't happening on anywhere near the promised schedule, and it's looking relatively unlikely to be "around the corner" right now unless there are unheralded breakthroughs in the technology.

And if it doesn't happen for 10 years, or even 5 years (which I personally think is an optimistic schedule, but my guess is as good as yours), then that's a whole lot of investors money that goes down the toilet.

And even with that in mind, the idea that they'll dominate the market is fanciful. There will not be a single company that dominates self-driving services. There will be a market, just like there's a market for everything else. That market will squeeze margins, and push companies to the brink.

The idea of a computer program that drives everyone around and just shits money back to its parent company is nice, but if Uber gets there first, Google won't be sitting around saying "whoops, missed that gravy train", nor will Tesla, or Apple, and I haven't even mentioned any of the existing car manufacturers, or Lyft.

There will be money to be had, but it will be low margin, high competition money.

What, waiting for Uber to achieve market dominance so they can adjust their price upward and be profitable? That's done already, it's called the Taxi industry. Can't wait for the days when the entire fleet of Uber self-driving cars smells like urine, just like the subways they've replaced but you get to pay 5 times the fare. But unfortunately, even that grimy future will not arrive I'm afraid.

The ride-share industry will never make money as it "intended" to. Uber knows it, all the VC knows it, even Wall Street knows it but they all keeps on selling the unicorn that's the only way "they" can get their money back. Uber burned a billion dollar in the 1st quarter of 2019, and this IPO netted them 8billion last week but by now it's down to 6 maybe? And self-driving car technology and public policy to allow them roaming our streets are still nowhere to be seen. Even by the most optimistic estimation, it's 5 years away, 5yrs x 4quarters (1billion per quarter) = 20 billion.

China is one of the fastest growing markets and even there, DidiChuxing the one that kicked Uber's behind and kicked them out of China is selling insurance on their app to "diversify" their business model. And still, not profiting. Why? Because people buy cars, not abandoning car ownership as Uber wants us to believe. https://www.scmp.com/tech/start-ups/art ... l-services

Think about this. When thousands of self-driving cars are roaming our streets that would mean pretty much every car is self-driving. Do we still need Uber then? My very own car can drop me off at the office then go back home pick up my kids and send them to school before stopping by the Whole Food to pick up my groceries. Better yet, my own self-drive car will also be roaming the streets to pick up fares and I do'nt have to share that profit with Uber.

Really ignorant stuff here for sure. I'll just say that 10s of millions of Americans don't own cars. Are you even aware of that? Not to mention, for many people, if you can simply hail a self driving car any time, why would you ever own one. Oh, and the fact that in the future car ownership is likely to be significantly more expensive than it is today as governments continue to dissuade people from owning them with ever higher fees and taxes on them. Shall I go on?

No, you can stop there.

Self-owned cars will be around for the next hundred years at least. Self-driving will take decades to mature to the point where you can "hail a self driving car any time". But for the sake of argument, let's see how that works.

Let's say you can hail an AV instantly, but AV's can't be there instantly. Certainly not as fast as it takes someone with a personal vehicle to get inside it and drive to where they want to go. Moreover, you'll be paying for that ride. But you don't own it. And they aren't going to be there when you NEED them reliably enough.

One medical emergency - something young people who have the health and stamina to go walkabout and be starry-eyed idealistic about car ownership don't ever consider - and the fallacy of not having access to one's own vehicle begins to dawn on idealists. If one thinks about the "unusual drives" the stuff you don't think about, and how often they happen, and when speed or ability play into it much more than you might think (say, suddenly having to drive 700 miles to pick up a friend who was burned out of house and home - and car). Those instances add up over a lifetime.

It's one thing to have ideals. It's another to live up to them. Most people can't. Not yet.

One MIGHT be able to live in a community where walking is all you need at any age. But that would take about 100 years to incorporate into our lifestyles to a point where it's the norm, instead of the oddball exception that it is today.

The long and short of it is that unless you luck out and find a community where all your needs and wants can be had by walking, it will be cars owned by people driving you around, or you driving yourself once you realize it's faster and better to be the one driving, than the one waiting to be driven. I wouldn't sneer at them nearly as much as your post implied. They get you where you want to go so you can have the luxury of not owning a car in a car-owing country.

I don't understand this autonomous vehicle push-to-profitability pitch at all. Its a bunch of smoke and mirrors. It is far cheaper to pay drivers than own the vehicle, maintain the vehicle, gas up the vehicle, pay for insurance on the vehicle, etc etc. Being autonomous does absolutely nothing to alleviate any of the aforementioned costs.

So what's the alternative? Several million people buy their own autonomous vehicle to rent out to uber? You are right back to square one of paying someone (now indirectly) to drive people around.

This company needs to be on the death watch list next year.

Probably not that soon; it takes a while to burn through ~$75 billion. But. yeah, they're gonna run out of cash long before they have an autonomous car up and running.

Also, they're slimy enough to give hagfish a run for their money. I would never get into an alleged autonomous car with Uber's name on it, simply because I don't think they can be trusted. "Move fast and break things" is not an inspiring motto when I'm potentially one of the things.

What assets does uber have other than brand recognition that makes it worth even $68B ??

Its revenues were 3 billion last quarter. It spent 4 billion, so it lost a billion. So it needs to adjust spending by 25% or revenues by 33% to break even.

But it's currently subsidizing rides to push out competition, so if they win some big metro areas where competitors just give up or go out of business, they can raise prices and make more money.

It would be interesting to argue the Sherman act implications of Uber's business model.

It isn't just the implications of US legislation that Uber need worry about. Other countries are very well aware of the implications of allowing a US company to achieve market dominance in this sector. Even where Uber have a presence currently, regulators are often adjusting rules to ensure that they do not have control of the market. In part this is because Uber are not seen as a trustworthy company, in part because existing taxis and their like do not have the same negative reputation as they seem to in parts of the US.

It is understandable that much of the discussion here is based on US experience. But the valuation given to Uber by investors surely cannot be based entirely on potential profits to be had in the US market. The reason that Apple, Google/Alphabet, Facebook, Amazon and their like have their current valuations is their power in the world market. Ride hiring is by its nature a localised business - the opportunities for geographical variation are considerable. Yes, US travellers may continue to launch their Uber app when in a foreign city, just as they may instinctively look to Amex for currency; they may find that locals do something different.

Probably not that soon; it takes a while to burn through ~$75 billion.

That's their market cap, not money available to burn. And if they sold off all outstanding shares to raise more cash, the glut of available shares would reduce the per-share price.

Quote:

"Move fast and break things" is not an inspiring motto when I'm potentially one of the things.

That's Facebook's motto, not Uber's.

That's how much money they raised in their IPO, isn't it? Apart from traders taking their cut - and the original VCs taking theirs, which is more substantial - what's left is money ready for bonfiring.

I don't understand this autonomous vehicle push-to-profitability pitch at all. Its a bunch of smoke and mirrors. It is far cheaper to pay drivers than own the vehicle, maintain the vehicle, gas up the vehicle, pay for insurance on the vehicle, etc etc. Being autonomous does absolutely nothing to alleviate any of the aforementioned costs.

So what's the alternative? Several million people buy their own autonomous vehicle to rent out to uber? You are right back to square one of paying someone (now indirectly) to drive people around.

This company needs to be on the death watch list next year.

Probably not that soon; it takes a while to burn through ~$75 billion. But. yeah, they're gonna run out of cash long before they have an autonomous car up and running.

Also, they're slimy enough to give hagfish a run for their money. I would never get into an alleged autonomous car with Uber's name on it, simply because I don't think they can be trusted. "Move fast and break things" is not an inspiring motto when I'm potentially one of the things.

They don’t have 75 billion in cash. That’s not how this works.

Apart from money peeled off for traders and the original VCs, where did the money raised during the IPO wind up?

[quote="I get it. You're a disgruntled and half crazed Uber driver. Maybe quit being an Uber driver and take a break from reddit or wherever it is that has you tilted at windmills.

wrong again not disgruntled at all this ponzi scam gets me $60+ an hour from my bed but i know what they doing is illegal & evil, i can play games with the app all day, others not so fortunate, really dont care about criminals either but gotta have a code, stealing from senior citizens & immigrants hiding behind an app like cowards be a man use a gun & rob little old ladies & grandpas ; ) because if slavery & human trafficking is hypebole than its theft or robbery 15+ million times per day

What assets does uber have other than brand recognition that makes it worth even $68B ??

Like a galaxy far far away, we can't directly measure the assets of a nebulous entity like Uber. We can only estimate their financial mass by their effects on the stock market, and conclude that 90% of Uber is made up of Dark Assets that we cannot yet observe.

IIRC one of the ideas behind limited companies was that they would be formed, for instance, to send a ship to the Indies on the spice trade, or fit and send out a whaler. There was a large initial sunk cost, the ongoing expenses of the voyage, and the obvious risk that the ship either did not come back, or came back empty. Limited liability protected the original investors (e.g. from claims that, say, the ship had engaged in piracy or slaving itself.)

The model has continued - but Uber is like sending out a ship in the hope that there will be a Spice Islands at the end of the voyage, and that no other ships will get there.

GM's price is based on expectations of future value. The future of the whole car and truck industry is nowadays very uncertain. GM's portfolio is not that of a market leader (i.e. Toyota and VAG).Uber is not an investment. It is a gamble. And gamblers are notoriously irrational, don't understand statistics, and throw good money after bad. Tesla is a gamble - that a South African with no track record in the automotive industry is cleverer than all those guys who have been in it since graduation.

What this shows is that there is a lot of money chasing the casino economy, and a lot of investors actively avoiding companies whose business model is based on tomorrow being like today, only bigger.

I don't understand this autonomous vehicle push-to-profitability pitch at all. Its a bunch of smoke and mirrors. It is far cheaper to pay drivers than own the vehicle, maintain the vehicle, gas up the vehicle, pay for insurance on the vehicle, etc etc. Being autonomous does absolutely nothing to alleviate any of the aforementioned costs.

So what's the alternative? Several million people buy their own autonomous vehicle to rent out to uber? You are right back to square one of paying someone (now indirectly) to drive people around.

This company needs to be on the death watch list next year.

Probably not that soon; it takes a while to burn through ~$75 billion. But. yeah, they're gonna run out of cash long before they have an autonomous car up and running.

Also, they're slimy enough to give hagfish a run for their money. I would never get into an alleged autonomous car with Uber's name on it, simply because I don't think they can be trusted. "Move fast and break things" is not an inspiring motto when I'm potentially one of the things.

They don’t have 75 billion in cash. That’s not how this works.

Apart from money peeled off for traders and the original VCs, where did the money raised during the IPO wind up?

You’re misunderstanding how an IPO works.

Pre-IPO, the stock is by definition not publicly traded; it could be widely held by members of the public, having been traded “over the counter” for years, but it’s generally “closely held”, by founders, later insiders, investors, and a few others.

When an IPO happens, the pre-IPO owners retain their shares and new stock is issued for the offering. The new stock is also not sold at market rates, it’s allocated to interested parties before the IPO, sold at the initial offering price, in Uber’s case $45 a share. The money raised by Uber from selling these new shares was reported to be about $8.1 billion. The “brag number” of total market capitalization, $85 billion - $82 - oops $78 billion is share price times ALL issued shares, both pre and post IPO.

After the allocation is completed, the stock can be listed on a market if it’s met the market’s rules and the company has applied; one of the rules is a certain amount of public ownership. The pre-IPO owners of the company usually have restrictions on how soon after IPO they can sell, commonly 90 to 180 days; however, it’s a contractual thing, primarily to prevent the market from being flooded, and it doesn’t necessarily apply to every pre-IPO share. The details will be in the IPO prospectus, but I suspect all the founders and VCs are locked, as are most or all of the current employees.

The shares that are tanking were probably owned by:- Uber, selling unallocated shares, if any- the investment bank who ran the IPO - they probably got paid in shares, some unrestricted - possibly old pre-IPO shareholders who are neither founders, VCs, nor current employees, e.g. people who exercised options in the past and now work elsewhere - flippers, both individuals and institutional speculative traders (people actually borrowed money to pay for their IPO allocation- now they’re.... upset... many can’t carry the debt for long and are panic-selling now)

”Going public” has both advantages and disadvantages for companies and stockholders. Companies can sell more new stock or buy it back, to raise more capital or dispose of it to the benefit of remaining shareholders. They don’t have to cede power to a handful of investors to raise money, but they cede it to the public and most comply with market regulations as well as SEC rules for publicly traded companies. And there’s an actual “market value” finally directly ascribed to a share; previous “values” of a company based on a private investment are better than no information, but are pretty manipuable and inherently speculative.

TLDR: Uber raised $8.1 billion new dollars and will have a very hard time getting $40 a share in the future, for a long time. We haven’t seen the bottom yet, imho.

I apply the same reasoning to taxis. I will never take a Lyft or Uber knowing that my dollars go to a multinational company whose true intent is to eliminate taxi drivers altogether. I take the local taxis wherever I go, regardless of the price, because all things considered they're getting less screwed by their employer when compared to the gig companies, and it keeps the money in the local economy for longer.

Good luck with that if you ever travel to somewhere like Egypt. Oh boy, a local taxi! It's a 1980 Russian-made deathtrap that costs 2x what an Uber costs after haggling like crazy, I have to pay in cash, and the driver has a 50/50 chance of being a suicidal maniac.

I'll stick with Uber/Lyft/Careem, thanks. I rent cars when I'm in Tunisia just so I don't have to deal with the local taxis, as there is no Careem/Uber/etc there.

I don't think many people are going to cry over taxi companies going extinct, thanks. I have occasionally taken taxis in the past 5 years, and they try to screw me about 50% of the time in both rich and poor countries. Awful experiences. I've had like two bad experiences with Uber ever, after hundreds of rides. I travel a lot and Uber/Lyft/Careem is a godsend.

E: Uber specifically as a company sucks, but the implementation is massively superior to any taxi company. It's not just the app that makes me like uber, it's also that the cars are well taken care of, and the drivers are rarely suicidal maniacs. The driver rating system is A++++++ would use again.